S&P trims Virgin Australia

S&P said it lowered its issuer credit rating on Virgin Australia Holdings Ltd. to CCC from B- and lowered its related issue ratings on the airline's debt to CCC- from CCC+.

At the same time, S&P placed all ratings on CreditWatch with developing implications.

Recovery ratings on the debt remain unchanged at 5.

“The CreditWatch developing placement reflects our view that a default or distressed exchange appears increasingly likely over the next 12 months, absent timely government or other support and/or a swift reversal of the Covid-19 outbreak,” S&P said in a news release.

S&P said it lowered its ratings on Virgin Australia to reflect S&P’s view that the company's cash outflow and liquidity pressures have intensified. This follows Virgin Australia's decision to temporarily ground 125 aircraft, reduce domestic capacity by 90%, as well as suspend international flights and Tigerair Australia in response to heightened government-led Covid-19-related restrictions. The airline will also defer certain supplier payments.

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